COMPANY NEWS; BellSouth to Spend More on Service

The BellSouth Corporation, the largest of the regional Bell companies, said yesterday that it planned to spend nearly $9 billion to modernize its local telephone service by 1995.

The amount is an increase from the $8.5 billion allotted in its previous three-year budget.

BellSouth, which covers nine states in the fast-growing South, has experienced stronger growth than telephone companies in other regions, like California, where the persistent recession and high unemployment have hurt the Pacific Telesis Group. BellSouth, based in Atlanta, is assuming an annual growth rate of 3.5 percent in the number of telephone lines, compared with growth rates of 1 percent and 2 percent elsewhere in the country. More Digital Switching Systems

Besides replacing old or damaged telephone lines, the BellSouth money will go toward the further deployment of digital switching systems, which increase the number and speed of telephone calls on the network. They also allow the use of sophisticated computer programs that can provide new services like caller-identification or videoconferencing.

While the overall spending rise is modest, less than 6 percent over three years, what is more important is that BellSouth is not only maintaining a robust level of spending, but increasing it, said William M. Ferguson, BellSouth's group president for network and technology. New Telephone Lines

The largest portion of the budget, about $5.7 billion, has been set aside to add telephone lines to the 18.5 million lines in Florida, Georgia, South Carolina, North Carolina and Tennessee. Some of the budget will also be used to replace damaged or worn equipment, including $45 million for damage related to Hurricane Andrew in Florida last year.

Most of the remaining money will be used to modernize the network. About 61 percent of telephone lines are digital, where voice and data are carried in the code understood by computers, instead of the older analog language. By 1995, about 81 percent of the lines will be digital.

These digital lines make possible the use of what is known as Signaling System No. 7. This computer hardware and software system provides more efficient routing of calls.

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A version of this article appears in print on February 17, 1993, on Page D00005 of the National edition with the headline: COMPANY NEWS; BellSouth to Spend More on Service. Order Reprints|Today's Paper|Subscribe